Chapter Ins 53

Ins 53.04(2)(c)4.a. a. Whether a nomination committee is in place to identify and select individuals for consideration.

Ins 53.04(2)(c)4.b. b. Whether term limits are placed on directors.

Ins 53.04(2)(c)4.c. c. How the election and re-election processes function.

Ins 53.04(2)(c)4.d. d. Whether a board diversity policy is in place and, if so, how it functions.

Ins 53.04(2)(c)5. 5. The processes in place for the board to evaluate its performance and the performance of its committees, as well as any recent measures taken to improve performance including any board or committee training programs that have been put in place.

Ins 53.04(2)(d) (d) The insurer or insurance group shall describe the policies and practices for directing senior management, including a description of the following factors:

Ins 53.04(2)(d)1. 1. Any processes or practices including, as an example, the suitability standards, to determine whether officers and key persons in control functions have the appropriate background, experience and integrity to fulfill their prospective roles, including:

Ins 53.04(2)(d)1.a. a. Identification of the specific positions for which suitability standards have been developed and a description of the standards employed.

Ins 53.04(2)(d)1.b. b. Any changes in an officer’s or key person’s suitability as outlined by the insurer’s or insurance group’s standards and procedures to monitor and evaluate such changes.

Ins 53.04(2)(d)2. 2. The insurer’s or insurance group’s code of business conduct and ethics, the discussion of which considers, for example, the following:

Ins 53.04(2)(d)2.a. a. Compliance with laws, rules, and regulations.

Ins 53.04(2)(d)2.b. b. Proactive reporting of any illegal or unethical behavior.

Ins 53.04(2)(d)3. 3. The insurer’s or insurance group’s processes for performance evaluation, compensation and corrective action to ensure effective senior management throughout the organization, including a description of the general objectives of significant compensation programs and what the programs are designed to reward. The description shall include sufficient detail to allow the commissioner to understand how the organization ensures that compensation programs do not encourage or reward excessive risk taking. Elements to be discussed may include, for example, all of the following:

Ins 53.04(2)(d)3.a. a. The board’s role in overseeing management compensation programs and practices.

Ins 53.04(2)(d)3.b. b. The various elements of compensation awarded in the insurer’s or insurance group’s compensation programs and how the insurer or insurance group determines and calculates the amount of each element of compensation paid.

Ins 53.04(2)(d)3.c. c. How compensation programs are related to both company and individual performance over time.

Ins 53.04(2)(d)3.d. d. Whether compensation programs include risk adjustments and how those adjustments are incorporated into the programs for employees at different levels.

Ins 53.04(2)(d)3.e. e. Any claw back provisions built into the programs to recover awards or payments if the performance measures upon which they are based are restated or otherwise adjusted.

Ins 53.04(2)(d)3.f. f. Any other factors relevant in understanding how the insurer or insurance group monitors its compensation policies to determine whether its risk management objectives are met by incentivizing its employees.

Ins 53.04(2)(d)4. 4. The insurer’s or insurance group’s plans for CEO and senior management succession.

Ins 53.04(2)(e) (e) The insurer or insurance group shall describe the processes by which the board, its committees and senior management ensure an appropriate amount of oversight to the critical risk areas impacting the insurer’s business activities, including a discussion of the following:

Ins 53.04(2)(e)1. 1. How oversight and management responsibilities are delegated between the board, its committees and senior management.

Ins 53.04(2)(e)2. 2. How the board is kept informed of the insurer’s strategic plans, the associated risks, and steps that senior management is taking to monitor and manage those risks.

Ins 53.04(2)(e)3. 3. How reporting responsibilities are organized for each critical risk area. The description should allow the commissioner to understand the frequency at which information on each critical risk area is reported to and reviewed by senior management and the board. This description shall include the following critical risk areas of the insurer:

Ins 53.04(2)(e)3.a. a. Risk management processes. An own risk and solvency assessment summary report filer may refer to its assessment summary report under s. 622.09, Stats.

Ins 53.04(2)(e)3.b. b. Actuarial function.

Ins 53.04(2)(e)3.c. c. Investment decision-making processes.

Ins 53.04(2)(e)3.d. d. Reinsurance decision-making processes.

Ins 53.04(2)(e)3.e. e. Business strategy and finance decision-making processes.

Ins 53.04(2)(e)3.f. f. Compliance function.

Ins 53.04(2)(e)3.g. g. Financial reporting and internal auditing.

Ins 53.04(2)(e)3.h. h. Market conduct decision-making processes.

Ins 53.04 History History: CR 19-013: cr. Register April 2020 No. 772, eff. 5-1-20; correction in (2) (c) 4. d. made under s. 35.17, Stats., Register April 2020 No. 772.